The federal government has put on hold some $18 billion in New York infrastructure projects tied to the Hudson River rail tunnel upgrade and Second Avenue subway extension as it reviews how contracts are awarded.
The projects would serve throngs of passengers commuting in and out of the largest U.S. commercial real estate market.
The pause is “to ensure funding is not flowing based on unconstitutional DEI principles,” Office of Management and Budget Director Russell Vought said Wednesday in a post on the social media platform X, referring to the so-called diversity, equity and inclusion framework that has often guided hiring and other policies in many companies and institutions.
The U.S. Department of Transportation — the agency responsible for delivering the infrastructure money — issued an “interim final rule” Wednesday that bars “race- and sex-based contracting requirements from federal grants.”
The announcement of the New York freeze comes on the first day of the U.S. government shutdown after Congress failed to reach a deal on funding for the start of the new fiscal year. The Department of Transportation said its review on contracting requirements will now take more time because the shutdown forced it to furlough its civil rights staff.
“Subsidizing infrastructure contracts with taxpayer dollars based on discriminatory principles is unconstitutional, counter to civil rights laws, and a waste of taxpayer resources,” the department said Wednesday in a statement.
The agency said it’s notified New York about the projects being “under administrative review to determine whether any unconstitutional practices are occurring.”
The Hudson rail tunnel upgrade, known as the Gateway project, involves building a new tunnel and associated railroad infrastructure to carry Amtrak and NJ Transit passenger trains between New Jersey and New York under the Hudson River while the existing tunnel is being "rehabilitated," according to the project’s website.
The Second Avenue subway project, in its second phase, aims to extend the Q line that currently ends at 96th Street north into East Harlem and Harlem, according to the Metropolitan Transportation Authority’s website.
“The federal government wants to immediately ‘review’ our compliance with rules they told us about moments ago. We’re reviewing their tweets and press releases like everyone else. For now, it looks like they’re just inventing excuses to delay one of the most important infrastructure projects in America,” John J. McCarthy, chief of policy and external relations at the Metropolitan Transportation Authority, said in an emailed statement to CoStar News.
The Gateway Development Commission, which oversees the Hudson rail tunnel project, didn't immediately respond to a request seeking comment.